Detroit Failure Could Spark 'Economic Chaos'

Analysts warn that letting automakers sink will have impact across the economy

By Rob Quinn, Newser Staff

Posted Dec 13, 2008 9:17 AM CST

(Newser) – Letting one of the Big Three go under could have disastrous effects on many corners of the American economy, McClatchy Newspapers reports. Beyond the jobs lost at the companies and their suppliers—as well as the jobs lost everywhere those workers spend their wages—the repercussions would hit sectors as diverse as defense, television, and even sports.

If the Big Three are unable to meet their obligations, taxpayers would need to pick up the tab for billions in pensions and health care. The Center for Automotive Research estimates that a 50% contraction in the industry would cost the country 2.5 million jobs. A GM or Chrysler bankruptcy "would be the start of a cascade of failures,” one industry analyst said. “The economy will be in chaos within weeks."

[Images (3)]

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Chrysler vehicles are seen parked in a holding lot at the Jefferson North Assembly in Detroit, Friday, Dec. 12, 2008. (AP Photo/Carlos Osorio)

General Motors Corp. headquarters are shown through a doorway of an empty warehouse in Detroit, Wednesday, Dec. 10, 2008. (AP Photo/Paul Sancya)

Chrysler Motors cars on sale at a dealership in Dormont, Pa. (AP Photo/Gene J. Puskar)

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We believe the economy is in such a weakened state right now that adding another possible loss of one million jobs is just something our economy cannot sustain at the moment. - White House spokesman Dana Perino

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Detroit Failure Could Spark 'Economic Chaos'